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China to strictly control new local gov't borrowing

(Xinhua)

16:01, March 14, 2012

Chinese Premier Wen Jiabao speaks during a press conference after the closing meeting of the Fifth Session of the 11th National People's Congress (NPC) at the Great Hall of the People in Beijing, capital of China, March 14, 2012. (Xinhua/Chen Jianli)

BEIJING, March 14 (Xinhua) -- Premier Wen Jiabao said on Wednesday that the government's debts are at a controllable and safe level, adding that the increase of debts will be "strictly controlled."

Wen told a press conference that China's debt-to-GDP and budget deficit-to-GDP ratios are at a fairly low level, and they are both lower than that of many developed countries and newly emerging economies.

Wen said that in 2010, the volume of local government debts stood at 10.7 trillion yuan (1.70 trillion U.S. dollars). The figure only increased by 300 million yuan by the end of 2011.

"We will take the local government debts very seriously, and we will not allow it to adversely affect China's development," said Wen.

The majority of government debts is high quality assets, with stable cash flows and promising returns. The debts of some projects can be repaid by their returns, according to Wen.

He said the government will properly handle the debt stock, and strictly control the increase of government debts, adding that revenues and expenditures of local governments must be incorporated into the local governments' budgets and final accounts, and be subject to supervision by the people congresses at the same level.

Wen called for making market play a role in handling local government debts in ways of asset disposals, transfers of projects and selling of equities.

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